APRIL 11, 2025
Democratic U.S. Sens. Adam Schiff of California and Ruben Gallego of Arizona walk at Capitol Hill in Washington, D.C., on Nov. 14, 2024. – Hannah McKay / Reuters
Suggestions of insider trading and market manipulation have been levied against Trump administration officials and members of Congress as markets whipsawed following the changing tariff policy of President Donald Trump.
Trump announced his sweeping tariff regime on April 2, after which the markets tanked. He then announced a reset of tariffs on most countries − except China − to 10% on Wednesday, when market reactions created a short-lived rebound.
During House testimony on tariffs that came Wednesday as Trump announced a 90-day pause on tariffs, Democratic Rep. Steven Horsford of Nevada asked U.S. trade representative Jamieson Greer: “Is this market manipulation? Who benefits? What billionaire benefits from this?”
Democratic Rep. Alexandria Ocasio-Cortez of New York called for a ban on congressional stock trading and alluded to impropriety by members.
“Any member of Congress who purchased stocks in the last 48 hours should probably disclose that now,” Ocasio-Cortez wrote on X. “I’ve been hearing some interesting chatter on the floor.”
In a statement to USA TODAY, the White House dismissed accusations that posts by Trump on Truth Social ahead of the pause announcement were attempts at market manipulation.
“It is the responsibility of the President of the United States to reassure the markets and Americans about their economic security in the face of nonstop media fearmongering,” the White House said.
Here’s what you need to know about market manipulation and insider trading as the accusations fly.
How are market manipulation and insider trading defined?
The Securities and Exchange Commission says insider trading occurs when an investor knows of “material nonpublic information” and then uses that information in violation of a duty to refrain from trading or sharing the knowledge.
The commission defines market manipulation as “when someone artificially affects the supply or demand” for an asset such as stocks or bonds. The SEC says tactics for manipulation can include:
- Spreading false or misleading information about a company
- Engaging in a series of transactions to make a stock, bond or other financial asset appear more actively traded
- Rigging quotes, prices, or trades to make it look like there is more or less demand for a security than is the case
Why are people alleging insider trading against Trump officials?
Democratic Sens. Adam Schiff of California and Ruben Gallego of Arizona wrote a letter to administration officials that the sequence of Trump’s posts on social media and the market increase raised “grave legal and ethics concerns.”
They pointed to Wednesday’s 9.5% gain for the S&P 500, a major stock index, and an immediate 18% jump in the price of a share of Tesla, co-founded by Trump aide Elon Musk, who publicly opposed the tariffs in a feud with Trump’s trade advisor.
“The president, his family, and his advisors are uniquely positioned to be privy and take advantage of non-public information to inform their investment decisions,” Schiff and Gallego wrote.
Schiff and Gallego asked for an “urgent inquiry” into the matter and posed several questions, but did not provide any evidence that Trump’s family or staff traded on insider knowledge.
Hedge fund founder Spencer Hakimian noted on X that NASDAQ call volumes “spiked” Wednesday ahead of the tariff announcement, calling it, “not a good look at all.” Purchasing calls indicate that an investor believes a stock or index will rise.
Republican Rep. Carlos Gimenez of Florida told CNN on Thursday that he had no concerns about Trump’s posts influencing markets, saying that there was a clear buying opportunity.
“We had lunch with a major stock broker from New York and we were talking to him about the tariffs and all that. And then one of the things he said was it’s time to buy,” Gimenez said. “He had no idea what was going to happen later.”
What is the punishment for insider trading?
A person convicted of criminal insider trading can face up to 20 years in prison.
Martha Stewart served five months in prison in 2004 for charges of obstruction of justice in connection to an insider trading scheme. Stewart sold about $230,000 of drug maker ImClone shares a day before the FDA announced its decision to deny approval to a key drug − a fact she learned about beforehand from her stockbroker.
Jeffrey Skilling, former CEO of Enron, was sentenced to 24 years in prison in 2006 in part for insider trading. Skilling was convicted on 19 counts of conspiracy, securities fraud, insider trading and lying to auditors as a part of his role in the collapse of energy trader Enron Corp.
The sentence was cut to 14 years in 2013 after a federal court said a sentencing guideline had been improperly applied.
Courtesy/Source: This article originally appeared on USA TODAY
